I am considering moving out of full time employment and becoming self employed and moving into contract work.

I will be working as a .NET developer (full stack web, desktop or mobile), and will be working in the UK.

Other than the obvious loss of benefits such as holidays, sick pay and other such things, what are some of the things i need to think about and be prepared for?

  • 2
    Finding customers :-) Jun 26, 2017 at 19:17
  • 5
    Charge 3x more than you imagine you need to charge.
    – Fattie
    Jun 26, 2017 at 19:59
  • 3
    see also freelancing.stackexchange.com/questions/tagged/uk
    – mcknz
    Jun 26, 2017 at 21:18
  • As a rule of thumb, your daily rate should be so that 150 days pay your normal employed salary. So if you are making £60,000 a year right now, your daily rate should be £400 or more. And both you and the client should be careful with the contracts to make sure you don't look like an employee.
    – gnasher729
    Jun 27, 2017 at 9:55
  • Create a limited company at companieshouse. And read all the information on the HMRC website you can find. Make sure you understand the tax rules to maximise your income.
    – gnasher729
    Jun 27, 2017 at 9:57

2 Answers 2


Just a Brainstorming from my personal experience:

  • Professional Indemnity that covers also damages resulting from your programming errors.
  • Terms and conditions that exclude any liability that is not covered by your P&I.
  • For some clients you will end up working two times the amount that you actually invoice. If that happens, raise your rate just for that one client.
  • Pricing: Everyone will want you to give a fixed quote. Offer to do it, but only with a perfect specification. Offer to help write the spec on an hourly basis. You will end up getting paid on an hourly basis, which is what you want in the first place.
  • If you give a fixed price, always calculate a 30% or so security margin on your estimates. If the customer complains, tell him that and offer a hourly contract.
  • Plan 2-4 days a month for admin work (invoicing, bookkeeping etc.)
  • Think about isolation of work and property of the ideas, if you work for different customers at once. Having your own Development-VM for every customer can help you with that, for example.
  • Backup, backup, backup: not only work, but also financial records, contracts, email etc.
  • Retirement, Healthcare, occupational disablement insurance ... even if you don´t have it, it should be reflected in your rates.
  • Meet with an independent insurance broker to discuss your situation and needs. Don´t buy any contract from him before sleeping it over and doing some research yourself.
  • Running costs and finacial buffer to meet them for at least three month.
  • Have a dedicated work area, best a dedicated office room. Don´t do your bookkeeping at your Gaming-desk.

I've recently made the jump from perm to contract myself (I'm also a .NET developer in the UK) so here's some info you might find useful:

  • Register a Limited company - really easy to do via the online service at Companies House

  • Get an accountant - you can do it all yourself but honestly I don't think it's worth it. I pay ~£1k a year for mine and he takes all the hassle out of it and has probably paid for himself just in his (legitimate) advice on how to maximize your income from the company

  • Get a business bank account - have a look around at the different banks offerings, personally I found it easiest to use the same bank as I do for my personal accounts

  • Day rate will vary depending on your skillset and location £350-450 is the right sort of ballpark

  • Insurance - you (or more accurately your company) will need to get Professional Indemnity and Public Liability insurance. This isn't massively expensive (and is a company expense not a personal one so is paid pre-tax) and as well as covering your ass is often a requirement in contracts as well.

  • VAT - if you are going to be generating more than £83k per annum in turnover then you have to register for VAT, under the current rules (as of 2017-18) there is no benefit to doing so in advance so you do this when you hit the threshold, again this is something a good accountant will help you with.

  • Keep all your company docs and admin organised and backed up

  • Things move very fast when you're applying for work, it's not unheard of to have an offer either same or next day following an interview.

  • Remember to take holiday! It's very easy to think that every time you take holiday "that's £X00 I'm losing" (I'm guilty of this) but you just have to remind yourself that the whole point of the day rate being as high as it is is to account for that over the year. If you don't take time off you will burn out and then you aren't going to be earning anything

  • Remember that contract roles often have very short notice periods (about a week is typical) so until you have a healthy safety buffer you'll want to be careful with how you spend.

Good luck!

  • Would not recommend to get you company-bank-account at the same bank you have your private account. If you business does not run well, anything you want from your bank on a private level will also get much harder. Agree on the rest.
    – Daniel
    Jun 27, 2017 at 14:54
  • @Daniel there is a slight element of risk there I concur - in my case there were significant financial and convenience benefits to doing it that way. Obviously YMMV applies.
    – motosubatsu
    Jun 27, 2017 at 15:07

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